I think what drove Mitch McConnell to offer up a surrender plan for the debt limit, and what prompted Republicans to go completely off the rails, is when President Obama played the Social Security card the other day, saying that he couldn’t guarantee that checks would be able to go out. This is a mathematical issue. $23 billion in checks are due to go out on August 3, and $12 billion will come in that day. There’s no good way to square that unless you backdate the checks or something, like someone who tells their landlord “Don’t cash that until the 5th.” These are simply math issues, and as the above-linked Bipartisan Policy Center report shows, there’s no good way to do it.
Payment prioritization is both illegal according to the Supreme Court and will prompt a debt crisis in the same way that a missed bond payment would according to Standard & Poor’s.
Nancy Pelosi is probably right that the markets would have to drop 400 points before this faction recognizes the problem, and even then they’ll think that someone’s pulling a fast one on them. There’s simply a break of trust with any institution here, a large problem for civil society, and not an unprompted one. This kind of know-nothingism is to be expected.
Just take a look at this NYT Mag piece on Kevin McCarthy, the designated babysitter for Tea Party freshmen:
Of course, the current topic in H-107 has been the debt ceiling, the legal limit that the federal government is authorized to borrow, and which Congress has raised largely without incident 10 times in the past decade alone. Treasury Secretary Timothy Geithner has said that the government will be unable to meet its financial obligations by Aug. 2 unless Congress permits it to borrow more. The freshmen have not been shy on this subject, either. McCarthy informally polled them when they first came to town in November for orientation. All but four of them said they would vote against raising the ceiling, under any circumstances. Then McCarthy (along with Ryan and the House Ways and Means chairman, Dave Camp) began conducting more listening sessions. The whip recognized that it would be counterproductive to lecture the freshmen about the economic hazards of not raising the debt ceiling. He also realized that it’s one thing to pass a budget — which in the end is a nonbinding political document — and another thing to throw America into default. And so McCarthy has urged them to consider raising the ceiling under certain conditions and thus to view this moment as a golden opportunity to force significant changes from the White House. “We all ran for a reason,” he tells them. “What’s most of concern to you? What is it that we think will change America?”
As a result, the freshmen have begun to move away from a hard “no” on raising the debt ceiling to a “yes, if.” In the conference room, several freshmen have said they’ll vote to raise the ceiling only if the president agrees to repeal his health care legislation. Or if Obama signs into law a constitutional amendment to balance the budget, after all 50 states have ratified it. Or if he’ll agree to mandatory caps on all nondefense spending. Or if he’ll enact the Ryan budget. The whip writes down all their ideas on a notepad. He never tells them that they’re being unrealistic — that two-thirds of the Senate and three-fourths of the state Legislatures are unlikely to pass a balanced-budget amendment.
The list of what are considered compromises here is pretty breathtaking.
See also the fact that this could come down to protecting capital gains tax rates. The priorities are just warped.
UPDATE: This interview with Stan Collender is pretty indicative of what to expect. Key line: “There was a religious-like fervor on that point: Voting for the debt ceiling was a sin, and you can’t just sin a little.”